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Definition of Unbundling
When a multinational firm unbundles its transfer of funds into separate flows for specific purposes.
A trend allowing creation of securities either by combining primitive and derivative
a measure used in academic finance articles to measure the excess returns an investor would have received over a particular time period if he or she were invested in a particular stock.
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
Same as PV, but usually includes a subtraction for an initial cash outlay.
the value in today’s dollars of cash flows that occur in different time periods.
Part of the return that is not due to systematic influences (market wide influences). In
A merger or consolidation in which an acquirer purchases the selling firm's assets.
A bond covenant that specifies certain actions the firm must take.
Requirement that none of an order be executed unless all of it can be executed at the specified price.
An arrangement whereby a security issue is canceled if the underwriter is unable
Any possession that has value in an exchange.
The ratio of total assets to stockholder equity.
Also called surplus management, the task of managing funds of a financial
Ratios that measure how effectively the firm is managing its assets.
The decision regarding how an institution's funds should be distributed among the
A security that is collateralized by loans, leases, receivables, or installment contracts
Methods of financing in which lenders and equity investors look principally to the
Categories of assets, such as stocks, bonds, real estate and foreign securities.
A bond indenture restriction that permits additional borrowing on if the ratio of assets to
Asset for asset swap
Creditors exchange the debt of one defaulting borrower for the debt of another
Asset pricing model
A model for determining the required rate of return on an asset.
A firm's investing in assets that are riskier than those that the debtholders expected.
Asset substitution problem
Arises When the stockholders substitute riskier assets for the firm's existing
An interest rate swap used to alter the cash flow characteristics of an institution's assets so as to
The ratio of net sales to total assets.
Asset pricing model
A model, such as the Capital asset Pricing Model (CAPM), that determines the required
A firm's productive resources.
A common element of a financial plan that describes projected capital spending and the
An option is at-the-money if the strike price of the option is equal to the market price of the
Beta (Mutual Funds)
The measure of a fund's or stocks risk in relation to the market. A beta of 0.7 means
Beta equation (Mutual Funds)
The beta of a fund is determined as follows:
The Treasury and federal agencies are moving to a book-entry system in which securities are not represented by engraved pieces of paper but are maintained in computerized records at the
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
Capital asset pricing model (CAPM)
An economic theory that describes the relationship between risk and
Related: Unsystematic risk
he written statement that follows any "trade" in the securities markets. Confirmation is issued
Cost of funds
Interest rate associated with borrowing money.
Value of cash, accounts receivable, inventories, marketable securities and other assets that
IOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and
Depository transfer check (DTC)
Check made out directly by a local bank to a particular firm or person.
Contracts such as options and futures whose price is derived from the price of the
Markets for derivative instruments.
A financial security, such as an option, or future, whose value is derived in part from the
To remove the general drift, tendency or bent of a set of statistical data as related to time.
Non-interest-bearing money market instruments that are issued at a discount and
Dividend yield (Funds)
Indicated yield represents return on a share of a mutual fund held over the past 12
Dow Jones industrial average
This is the best known U.S.index of stocks. It contains 30 stocks that trade on
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
An agreement permitting a bank customer to borrow either domestic dollars from the
In the interbank Eurodollar deposit market, an either-way market is one in which the bid
Electronic depository transfers
The transfer of funds between bank accounts through the Automated
Investment funds established for the support of institutions such as colleges, private
European Monetary System (EMS)
An exchange arrangement formed in 1979 that involves the currencies
Also called abnormal returns, returns in excess of those required by some asset pricing model.
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Instruments exempt from the registration requirements of the securities Act of 1933 or the
Expected future cash flows
Projected future cash flows associated with an asset of decision.
Federal agency securities
securities issued by corporations and agencies created by the U.S. government,
Non-interest bearing deposits held in reserve for depository institutions at their district Federal
Federal funds market
The market where banks can borrow or lend reserves, allowing banks temporarily
Federal funds rate
This is the interest rate that banks with excess reserves at a Federal Reserve district bank
Claims on real assets.
Refers to an order to buy or sell that can be executed without confirmation for some fixed period. Also,
Firm commitment underwriting
An undewriting in which an investment banking firm commits to buy the
Firm's net value of debt
Total firm value minus total firm debt.
See:diversifiable risk or unsystematic risk.
Long-lived property owned by a firm that is used by a firm in the production of its income.
Fixed asset turnover ratio
The ratio of sales to fixed assets.
Forward Fed funds
Fed funds traded for future delivery.
Free cash flows
Cash not required for operations or for reinvestment. Often defined as earnings before
Funds From Operations (FFO)
Used by real estate and other investment trusts to define the cash flow from
Negotiable U.S. Treasury securities.
Money that moves across country borders in response to interest rate differences and that moves
A package containing two or more different kinds of risk management instruments that are usually
A convertible security whose optioned common stock is trading in a middle range, causing
Incremental cash flows
Difference between the firm's cash flows with and without a project.
A legal claim to some future benefit, typically a claim to future cash. Goodwill, intellectual
International Monetary Fund
An organization founded in 1944 to oversee exchange arrangements of
International Monetary Market (IMM)
A division of the CME established in 1972 for trading financial
A put option that has a strike price higher than the underlying futures price, or a call option
Intrinsic value of a firm
The present value of a firm's expected future net cash flows discounted by the
Law of one price
An economic rule stating that a given security must have the same price regardless of the
asset that is easily and cheaply turned into cash - notably cash itself and short-term securities.
Value of property, equipment and other capital assets minus the depreciation. This is an
Limitation on asset dispositions
A bond covenant that restricts in some way a firm's ability to sell major assets.
Manufactured housing securities (MHSs)
Loans on manufactured homes - that is, factory-built or
Gold held by governmental authorities as a financial asset.
Actions taken by the Board of Governors of the Federal Reserve System to influence the
Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts
Composed of currency and coins outside the banking system plus liabilities to the deposit money banks.
Money center banks
Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
Related: Investment management.
Related: Investment manager.
Money markets are for borrowing and lending money for three years or less. The securities in
Money market demand account
An account that pays interest based on short-term interest rates.
Money market fund
A mutual fund that invests only in short term securities, such as bankers' acceptances,
Money market hedge
The use of borrowing and lending transactions in foreign currencies to lock in the
Money market notes
Publicly traded issues that may be collateralized by mortgages and MBSs.
Money purchase plan
A defined benefit contribution plan in which the participant contributes some part and
Money rate of return
Annual money return as a percentage of asset value.
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